ABSTRACT
There has been an extended discussion of the meaning and applicability of nonrecursive as distinct from recursive systems in econometrics, and throughout this discussion there has been a marked divergence of views as to the merits of the two types of models. In the case of explanatory models, then, the theorist asserts more than functional relationships among the variables; he also invests those relationships with a special interpretation, that is, with a causal interpretation. The asymmetry of causation in any instance of its realization has the following probability counterpart. It may make sense to talk about the probability distribution of y as being causally conditional on z but not make sense to talk about the probability distribution of z as being causally conditional on y. Simon in developing a sense of causality for econometric models, has used this notion of vector causality.
